ADR and Governance News from Jim Reiman

August – September, 2016

Friends and colleagues

Labor Day has come and gone, most children are back in school or about to begin school, and the business world has returned to the task of meeting its fiscal goals.  I hope you enjoyed the summer.  My family and I certainly did!

With summer behind us, I return to publishing a monthly issue of this Newsletter.  As regular readers of the Newsletter know, I focus on three areas:  corporate governance, alternative dispute resolution (“ADR”), and eDocuments and eDiscovery.   Additionally, I almost always include a matter of general interest in an “Interesting Article of the Month” section.

While I was able to find no interesting corporate governance pieces for my June/July issue, this month I present two:  a study regarding corporate buy-backs reviewing both directors’ and shareholders’ perspectives, and an article by Bloomberg’s Michael Greene discussing the SEC’s struggles to address board diversity, and specifically to define just what “diversity” means.

For my arbitrator readers, I present two cases:  one wherein an award which was vacated by a court in the country which was the seat of the arbitration but enforced by a United States District Court, and another in which a party sought to vacate an arbitral award based upon the claim that the arbitrator failed to follow and apply the applicable law.

Regarding eDiscovery, I present a paper by Anne Kershaw arguing that an experienced lawyer who understands the case, the client objectives and strategy, and possessing technical analysis skills or working collaboratively with someone who has them can find the relevant documents in litigation or an investigation faster, less expensively and as effectively as a team of contract review lawyers working at much lower hourly rates conducting ‘linear’ document review.

Finally, for my interesting article of the month, I’ve presented an article published in Foreign Policy describing a theory that China’s cultural and technological roots lie in Egypt and not in China  and the “children of the Yan and Yellow Emperor.

This Month’s Articles

Corporate Governance

  • Defining “Diversity”:  The SEC’s Chairman Mary Jo White stated in a June 27, 2016 speech that the SEC is reviewing the SEC’s current rule requiring the disclosure of company board nomination diversity policies and assessment practices “with an eye toward revising the rule if there [is] a need.”  Michael Greene, writing in Bloomberg BNA, discusses the potential rule-making and the challenge of defining just what “diversity” means.  Is it gender/race/ethnicity or something broader?
  • Corporate Buybacks – Directors’ Perspectives:  The Investor Responsibility Research Center Institute published a report in August regarding corporate buyback programs and how companies make decisions about share repurchases.  The Report’s findings include four main reasons for buybacks, and directors’ thoughts regarding how to improve disclosures.

Alternative Dispute Resolution

  • Enforcing an Award Vacated by a Court in the Country Wherein the Award was Entered:  In Corporación Mexicana De Mantenimiento Integral v Pemex‐Exploración Y Producción the United States Court of Appeals for the Second Circuit made the highly unusual ruling that an arbitration award be enforced by the Courts of the United States even though the award was vacated by a court of the country that was the seat of the arbitration.  It is this author’s understanding that this is only the second US case enforcing an award vacated by a court of the country that was the seat of the arbitration.
  • Vacating an Arbitral Award for “Manifest Disregard of Law”:  The US District Court for the Western District of North Carolina (Asheville) held in the case Bowers v Northern Two Cayes Company that while the law of the Fourth Circuit permits vacating an arbitration award for “manifest disregard of the law,” the standard of proof is high and was not met in the case presented.

eDocuments & eDiscovery

  • Iterative Legal Analysis & Sampling vs. Linear Document Review – A Comparative Case Study:  The study presents the question:  “Can lawyers conducting iterative data analysis and sampling identify relevant documents more efficiently than legal teams undertaking linear review?”  It’s answer:  yes!

Interesting Article of the Month

  • Does Chinese Civilization Come From Ancient Egypt?:    Ricardo Lewis, an associate researcher at the University of Science and Technology in Hefei, China, explores the research and theory of Sun Weidong, a highly decorated geochemist who theorizes that the roots of Chinese culture lay not in China, but Egypt.  His belief:  a small population of Hyksos – a people who ruled parts of northern Egypt between the 17th and 16th centuries B.C. – used seafaring technology to bring their Bronze Age culture to the coast of China.

I hope you find one or more of the below articles of interest and worthy of your inbox’s space.

Warm regards,

Jim Reiman

Articles / Corporate Governance

Defining Diversity:  

All in the corporate governance arena know that diversity is a current “hot” topic, and that most boards are striving to diversify their boards.  The question must be asked, however:  “How does one define ‘diversity?’”  Michael Greene, writing in Bloomberg BNA, asks that exact question.  He notes that the SEC is reviewing the matter, and also notes the challenge that the Commission faces as it struggles to define the term.

First, the SEC’s review.  In a keynote address at the International Corporate Governance Network Annual Conference in San Francisco, CA on June 27, 2016, the SEC’s Chairwoman Mary Jo White stated:

Diversity on boards, and in organizations more generally, is very important to me and I have not shied away from expressing my strong views on the topic.  As a former member of a public company board and its audit committee, I have seen first-hand what the research is telling us – boards with diverse members function better and are correlated with better company performance.  This is precisely why investors have – and should have – an interest in diversity disclosure about board members and nominees.

*     *     *

I announced in January that I had directed the SEC staff to review our rule and the extent and quality of disclosures that have followed, with an eye toward revising the rule if there was a need.  And, I can report today that the staff is preparing a recommendation to the Commission to propose amending the rule to require companies to include in their proxy statements more meaningful board diversity disclosures on their board members and nominees where that information is voluntarily self-reported by directors. 

Ms. White’s address to the International Corporate Governance Network suggests that her thinking is gender and race focused.  Even assuming that the SEC limits its definition of diversity to just those qualities, questions abound.

The commission must consider the “multiple dimensions of diversity,” said Stanford law professor and former SEC member Joseph Grundfest.  Beyond gender, there are numerous ways to classify ethnic diversity, “and the classification challenges in this space are legendary. . .” 

Will the agency, for example, define who is African-American or will it leave it to directors to self-identify, or will the agency require that the corporation classify each director’s ethnicity? Grundfest asked.  In addition, how will the agency approach disclosures when directors prefer not to be classified or when they can claim multiple heritages?

Many argue that focusing on gender and ethnicity is too narrow, and that a broader definition of “diversity” should be employed.

While most companies disclosed [in their annual reports] that they do in fact consider ‘diversity’ when appointing directors, only about half have defined diversity in the ‘socio-demographic terms of gender, race, or ethnicity’ said Serena Fong, vice president of government affairs at Catalyst, a nonprofit organization whose mission is to accelerate the progress for women through workplace inclusion. 

Fong told Bloomberg BNA that many companies consider diversity in terms of experience, rather than gender or ethnicity. 

*     *     *

There are a million factors that can go into diversity, Peter Gleason, president of the National Association of Corporate Directors, told Bloomberg BNA. “It’s a complex issue,” he said, adding that the SEC has a tough task ahead of it in coming up with an effective rule. . . . Gleason also noted that companies must do a better job of explaining what they are considering when it comes to diversity.  Shareholders want to know why a board’s composition represents the best combination of skills, experience, background and diversity that will help the company perform at its highest level, he said.

 Michael Greene,  “SEC Faces Tough Task in Defining Board `Diversity,’” Bloomberg BNA, July 13, 2016


 Mary Jo White’s June 27, 2016 Speech:  “Keynote Address, International Corporate Governance Network Annual Conference: Focusing the Lens of Disclosure to Set the Path Forward on Board Diversity, Non-GAAP, and Sustainability”


Corporate Buybacks and the Board

As regular readers of this Newsletter know, I’m a fan of the Investor Responsibility Research Center Institute (IRRCi) and its Executive Director, Jon Lukomnik is a friend.  Full disclosure made, I present this month a research report published by the IRRCi in August regarding share repurchase (or buy-back) plans titled Corporate buybacks and the board:  Director perspectives on the share repurchase revolution.

This year has seen a significant increase in the number of companies buying back their shares:  “S&P 500 companies acquired $166.3 billion of their own shares in the first quarter of 2016, more than in any other quarter since the financial crisis.”  “In each of the last nine quarters, at least 370 S&P 500 companies repurchased shares, and over the last three years S&P 500 companies spent over $1.5 trillion on buybacks.”  Moreover, “[b]etween 2003 and 2013, S&P 500 companies doubled their spending on share repurchases and dividends while cutting their spending on investments in new plants and equipment.  According to data from McKinsey, buybacks have accounted for 47% of US companies’ income since 2011, up from 23% in the early 1990s and less than 10% in the early 1980s.”

Given this data and the trend to repurchase shares rather than use corporate profits to pay dividends, IRRCi asked two questions:  why? and; how do companies make decisions about share repurchases?

To answer their questions, they commissioned Tapestry Networks to “undertake an extensive inquiry into non-executive directors’ views about share repurchase programs.  Between August, 2015 and May, 2016, Tapestry interviewed 44 directors representing 95 publicly traded US companies with an aggregate market capitalization of $2.7 trillion and aggregate revenue of $1.4 trillion.”  Their “report synthesizes the perspectives of these nonexecutive directors and other research on a number of important questions related to share repurchase programs:

• What is the board’s involvement in capital return decision-making?

• Why do companies buy back shares?

• Are buybacks jeopardizing growth?

• Do repurchase programs unjustly enrich senior executives?

• Are buyback disclosures clear and effective?”

Addressing IRCCI’s first question, why do companies repurchase their shares, the study identified four principal reasons and the driving factors for each:

“Directors universally said that excess capital should be returned to shareholders, although they had different opinions of what ‘excess’ means. The process begins with evaluating the company’s strategy and determining the company’s capital needs (often described in terms of the balance sheet, investment, dry powder, and debt rating requirements). For the vast majority of directors, capital is “excess” only if it remains after all productive investments are made and current dividend expectations are met.”

According to the study, “[m]onetary and fiscal policies and macroeconomic forces have pushed companies to consider repurchase programs. Many directors said that they would be unlikely to find enough good opportunities to invest all their companies’ capital in today’s low-growth, low-interest-rate environment, and that it was often better to return capital to shareholders.  They tend to prefer buybacks to dividends, primarily because they believe a buyback program offers greater flexibility over time.”

“US tax policies that discourage companies from repatriating foreign cash have also spurred buyback activity. Because creditors know that borrowers can repatriate foreign earnings at any time, some corporations are able to engage in almost costless borrowing to fund buyback programs.”

The full study is a worthy and relatively easy read.  One conclusion of note:  “There is room to improve corporate disclosures about share repurchase programs.”  Explaining its conclusion, the study states:  “[f]ew companies publicly disclose details about buyback decision-making and very few state which of the four reasons are driving any particular buyback program. Although a number of directors mentioned that their companies project how buyback activity will affect EPS and adjust targets accordingly, only 20 S&P 500 companies disclosed that they did so. Most companies and boards with robust buyback processes do not currently disclose enough to receive credit for their work.”

The IRRCi will be presenting a free webinar regarding their share buyback research on September 13, 2016 at 12:00 (noon) Eastern time.  Having joined other IRRCi webinars, I commend this one to you.  A link to the webinar’s registration page is provided below.

 The full study:  Buybacks and the board:  Director perspectives on the share repurchase revolution, IRRC Institute, Tapestry Networks, August, 2016

 The IRRCi will be presenting a free webinar regarding their share buyback research on September 13, 2016 at 12:00 (noon) Eastern time.  To register for the webinar:

Articles / Alternative Dispute Resolution

Enforcing an Award Vacated by a Court in the Country in which the Award was Entered:  

The case Corporación Mexicana De Mantenimiento Integral v Pemex‐Exploración Y Producción (“Pemex”), decided by the United States Court of Appeals for the Second Circuit in August, reached the extraordinarily unusual conclusion that an arbitration award shall be enforced by US courts even though the award was vacated by a court sitting in the country of the arbitration’s seat.

For those not conversant with the lexicon and priority of laws of international arbitration, the “seat” of the arbitration is the official site or place where the arbitration is deemed to occur.  The law of the seat governs the conduct and process of the arbitration.  Additionally, it also generally governs the validity and enforceability of the award.  In other words, if a court in the country where an arbitration is seated vacates an award, that award is generally not enforceable in other countries.  More specifically, under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”), the Federal Arbitration Act (“FAA”), and most countries’ arbitration acts, arbitral awards are to be enforced unless one of a very small number and very narrowly defined exceptions exist.  One of those exceptions is when the award “has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.” [New York Convention Article V(1)(e)]  .

In Pemex, the arbitration was seated in Mexico, and following the entry of an award by the arbitrators a Mexican court set aside and vacated the award.  Thus, under the New York Convention and the FAA, there was no requirement that the US courts enforce the award.  Moreover, strong US law exists holding that US Courts should refuse to enforce awards vacated by a court in the country in which the arbitration was seated.  Nonetheless, the United States District Court Southern District Court of New York ruled that the Pemex arbitration award be enforced in the US, and the Second Circuit affirmed that decision.

Background:  The Pemex case concerned a 1997 contract wherein Corporación Mexicana was to construct an oil platform for Pemex.  The actual construction was to occur in Mexico, and the country chosen for the seat of arbitration in the event of disputes was Mexico.  Difficulties arose, and a new contract was formed in 2003.  Both the 1997 and 2003 contracts contained “virtually‐identical arbitration” provisions – both naming Mexico as the seat for arbitration of disputes.

In 2004, notwithstanding the new 2003 contract, after the oil platform was 94% complete, Pemex seized the platform, ejected Corporación Mexicana from the job-site, and rescinded the contract.  The procedural history from that point forward becomes both complex and convoluted.  For the purposes of this Newsletter, what is important is that an arbitration occurred and a US$300 million award was entered in favor of Corporación Mexicana and against Pemex.  Corporación Mexicana thereupon sought to enforce the award against assets in the US, and Pemex simultaneously sought to annul or vacate the award in Mexico.  Pemex succeeded in vacating the award in Mexico, and then sought to block enforcement in the US claiming the exception to enforcement noted above.

As noted, the US District Court for the Southern District of NY ruled that the arbitration award should be enforced and the Mexican court’s judgment vacating that award ignored, and the Court of Appeals for the Second Circuit agreed.  The reasoning:  “giving effect to the subsequent nullification of the award in Mexico would run counter to United States public policy and would (in the operative phrasing) be ‘repugnant to fundamental notions of what is decent and just’ in this country.”

To reach its conclusion, the Appellate Court reviewed the US law applicable to enforcing foreign judgments generally, and the New York Convention and the Inter‐American Convention on International Commercial Arbitration (the “Panama Convention”) specifically.  The Appellate Court initially determined that a very strong bias exists in US law in favor of enforcing foreign court judgments (in this case, the judgment of the Mexican court vacating the arbitration award).  However, it concluded that US law does not requireenforcement, and exceptions to the general rule exist both under US law generally and the New York Convention and Panama Convention specifically.

“Although courts in this country have long recognized the principles of international comity and have advocated them in order to promote cooperation and reciprocity with foreign lands, comity remains a rule of ‘practice, convenience, and expediency,’ rather than of law.”  [citation omitted]   “When construing a statute, the doctrine of international comity is best understood as a guide where the issues to be resolved are entangled in international relations.” [citation omitted]  

Accordingly, a final judgment obtained through sound procedures in a foreign country is generally conclusive . . . unless . . . enforcement of the judgment would offend the public policy of the state in which enforcement is sought.”  [citation omitted]   “A judgment is unenforceable as against public policy to the extent that it is ‘repugnant to fundamental notions of what is decent and just in the State wherein enforcement is sought.’” [citation omitted]; “Nevertheless, ‘courts will not extend comity to foreign proceedings when doing so would be contrary to the policies or prejudicial to the interests of the United States.’” [citation omitted]

The public policy exception does not swallow the rule: “[t]he standard is high, and infrequently met”; “a judgment that ‘tends clearly’ to undermine the public interest, the public confidence in the administration of the law, or security for individual rights of personal liberty or of private property is against public policy.”  [citation omitted].  The exception accommodates uneasily two competing (and equally important) principles:  [i]  “the goals of comity and res judicata that underlie the doctrine of recognition and enforcement of foreign judgments” and [ii] “fairness to litigants.” [citation omitted]

Having identified the public policy exception to the general rule of comity, the Court next determined whether such exception was applicable to the Pemex case.  It concluded that it was:

The high hurdle of the public policy exception is surmounted here by four powerful considerations: (1) the vindication of contractual undertakings and the waiver of sovereign immunity; (2) the repugnancy of retroactive legislation that disrupts contractual expectations; (3) the need to ensure legal claims find a forum; and (4) the prohibition against government expropriation without compensation.

As one commentator put it:

With the [“Pemex”] decision, the Second Circuit joins the District of Columbia Circuit’s longstanding view that annulled arbitral awards are not automatically unenforceable and once again confirmed – in more definitive terms – that while the bar for enforcing an annulled award is high, U.S. courts can and should review the underlying facts of an annulled award sought to be enforced in the United States to determine whether the annulment violated fundamental principles of U.S. public policy.  

 The full opinion:  Corporación Mexicana De Mantenimiento Integral v Pemex‐Exploración Y Producción, __ F. 3d __, ___ WL _________ Case No. 13-4022 (2d Cir., August 2, 2016), the United States Court of Appeals for the Second Circuit

John M. Barkett, Frank Cruz-Alvarez, Sergio E. Pagliery and Marike Paulsson, Second Circuit Affirms Enforcement of $300 Million Annulled Award, August 16, 2016


Vacating an Arbitral Award for “Manifest Disregard of Law”,  

This case, Bowers v Northern Two Cayes et al, arises out of a claim for a real estate sales commission and a challenge to the dispute’s arbitration.

In an earlier proceeding in the case, the US District Court for the Western District of North Carolina (Ashville) entered an order compelling the parties to arbitrate their dispute pursuant to their listing agreement’s arbitration clause.  Thereafter, an arbitrator was selected and a challenge to the arbitration was presented to the arbitrator.  The arbitrator responded to the jurisdictional challenge by sending the parties an email “in which he expressed his opinion that the parties’ agreement called for binding arbitration but that the issue was one that should ultimately be addressed by this Court.”  Additionally, he entered an order which was effectively a preliminary injunction, requiring that an amount equal to the commission in dispute be withheld from any sales proceeds and placed in a secure escrow.

The plaintiff, Bowers, thereupon filed two motions with the District Court:  a “Motion for Expedited Consideration to Confirm Arbitrator’s Award and Arbitrator’s Opinion that the Arbitration is Binding,” and a “Motion for Confirmation of Arbitrator’s Order of Interim Measures and Issuing of Same Order from the Court.”  The Defendants opposed both motions arguing that the arbitrator’s order granting injunctive relief should be vacated, and that “the arbitrator’s order defies the parties’ intention to resolve their disputes via non-binding arbitration.”

The Court initially examined the power of an arbitrator to grant injunctive relief and its own power to review arbitral decisions.  On the question of the power to grant injunctive relief, the court quickly resolved that issue:  “An arbitrator has the power to grant preliminary injunctive relief, and district courts have the power to confirm and enforce such awards of equitable relief.” [citation omitted]

The Court next set forth its own power of review:

“A district court’s ability to review an arbitrator’s award, . . ‘is severely circumscribed.  Indeed, the scope of review of an arbitrator’s valuation decision is among the narrowest known at law because to allow full scrutiny of such awards would frustrate the purpose of having arbitration at all — the quick resolution of disputes and the avoidance of the expense and delay associated with litigation.’  [citation omitted]  Thus, a district court may vacate an arbitration award ‘only upon a showing of one of the grounds listed in the Federal Arbitration Act, or if the arbitrator acted in manifest disregard of law.’”  [citation omitted]

Lastly, the Court considered what constitutes “manifest disregard of law” and the proof required to evidence such.

The Fourth Circuit has explained that in order for a court to vacate an award on the grounds of the arbitrator’s manifest disregard for the law, the record before the court must show that:

(1) the applicable legal principle is clearly defined and not subject to reasonable debate; and (2) the arbitrator refused to heed that legal principle. We note that under this standard, proving manifest disregard require[s] something beyond showing that the arbitrators misconstrued the law, especially given that arbitrators are not required to explain their reasoning. 

[citation omitted]  A mere error or misapplication of the law is not sufficient grounds for vacating an arbitration award.  [citation omitted]The defendants argued that a “manifest disregard of law” existed in the case at bar because the arbitrator “failed to apply the appropriate legal standard for awarding a preliminary injunction.”   Additionally, they claimed that during oral argument the arbitrator “declared that he was not bound by the prevailing legal standard for granting preliminary injunctions in fashioning relief under [the arbitration rule applicable to the case].”

The District Court rejected both arguments.  With respect to the first, the Court noted that since the interim order was silent regarding the legal standard applied it could not determine what standard had been applied.  Significantly, the Court concluded:  “[H]owever, the lack of any discussion in that regard cannot reasonably be construed as a ‘refusal to heed’ the applicable legal standard on the part of the arbitrator.”

With respect to claimed statements of the arbitrator, the Court ruled:

[T]he arbitrator’s alleged statements made during oral argument are not part of the record before the Court and thus cannot be considered by the Court in determining whether the arbitrator acted with manifest disregard of the law in fashioning injunctive relief.  What is before the Court is the Order for Interim Relief, which reflects the arbitrator’s conclusion “that certain specific interim measures are necessary so as not to frustrate the primary thrust of the arbitration proceeding and the claims by Bowers which are to be adjudicated during the merits hearing of this matter . . . .”  

The full opinion:  Raymond V. Bowers Northern Two Cayes Company Limited and Lighthouse Reef Resort Ltd., United States District Court for the Western District Of North Carolina, Asheville Division, CIVIL CASE NO. 1:15-cv-00029-MR-DLH

Articles / e-Documents

eDiscovery Efficiency:  Iterative Legal Analysis & Sampling (“ILAS”) vs. Linear Document Review – A Comparative Case Study

A bi-product of the electronic document world is the ballooning quantity of electronic documents, and the rapidly increasing size of the data sets to be reviewed and analyzed in an eDiscovery project.  Many law firms faced with large eDiscovery projects turn to “low cost” attorneys retained on a project or hourly basis to review the electronic documents in the same manner as they would review paper “hard copy” documents.  It is now common to have several (often dozens) lawyers sitting side by side in a conference room or in an off-site office reviewing tens of thousands of electronic documents on rows of computer screens connected to an electronic database of documents.  The cost is huge, and most argue that the process is extraordinarily inefficient.

Anne Kershaw, managing director at Reasonable Discovery, LLC and Adjunct Professor, Masters of Science, Information and Knowledge Strategy at Columbia University’s School of Professional Studies posed the hypothesis:

Can an experienced lawyer who understands the case, the client objectives and strategy, and possessing technical analysis skills or working collaboratively with someone who has them (an “Iterative Legal Analysis and Sampling” (ILAS) approach), find the relevant documents in litigation or an investigation, faster, less expensively and as effectively as, a team of contract review lawyers working at much lower hourly rates conducting ‘linear’ document review?

For the purposes of Anne’s hypothesis, she defines “linear review” as “the process of having human eyes on all documents within the review universe.”

Her answer, based upon a study she and her company conducted, is an unequivocal “yes.” Her conclusion:  “using the same software, an ILAS approach can find all of the relevant documents found by a linear review and also many documents missed by a linear review, in a fraction of the time and for a fraction of the cost. In other words, a subject matter expert armed with iterative analysis and sampling tools can perform better than a team of linear reviewers.”

More specifically:

“The ILAS team was able to find more relevant documents than the linear review team (a higher “Recall”), was less likely to miss a responsive document, and was more likely to include a borderline document, i.e. the ILAS approach was overly conservative in its assessment of responsiveness in line with the preference of most litigators. Where in doubt, include it. That approach is generally preferred in litigation to the alternative that leads to a high number of false negatives – relevant documents missed. The linear review took 98 hours whereas the ILAS review took 14 hours.

With these numbers, paying the linear review team members $50 per hour, the cost of the review was $4,900.00.  Paying the ILAS team $200 per hour, the cost would be significantly less at $2,800.00.”

Author’s note:  while my personal opinion based on conversations with multiple practitioners is consistent with the conclusions of Anne’s study – that technology, properly employed, is a more effective and cost efficient method of conducting a large document review than a manual linear review – I note that Anne is not an unbiased academic.  While also an adjunct professor, she is a principal of an eDiscovery business.  Nonetheless, I present her study as a worthy read and recommend Anne (with whom I’ve discussed eDiscovery issues at conferences) as an expert whose opinions are worth hearing.

 Anne Kershaw, Esq., Iterative Legal Analysis & Sampling (“ILAS”) vs. Linear Document Review – A Comparative Case Study

Articles / Interesting Case of the Month

Does Chinese Civilization Come From Ancient Egypt? 

As many of my readers know, I’ve strong connections to China having built and operated a business there, and have great interest in that country’s rich culture and history.  I was thus struck by the publication of an article in Foreign Policy setting forth the theory that the “founders of Chinese civilization were not in any sense Chinese but actually migrants from Egypt.”  The theory is that the Hyksos, a people and culture who ruled parts of northern Egypt in the 17th and 16th centuries B.C., are the founders of Chinese culture and not as “historians long ago stated clearly: . . . the children of the Yan and Yellow Emperor.”

It should be noted that the theory of Egyptian roots is considered heresy by many Chinese and has been met by outrage on internet portals such as Sohu and popular message boards such as Zhihu and Tiexue.  Nonetheless, the evidence supporting the theory is substantial and the discussion (and political reaction to the theory’s publication) intriguing, hence I present it to you in this month’s Interesting Article of the Month.

While the theory of Egyptian roots has existed at least since the late 1800’s, the current controversy stems from the research and presentations of the highly regarded and “decorated” scientist, Chinese geochemist Sun Weidong.  Sun “conceived of this connection in the 1990s while performing radiometric dating of ancient Chinese bronzes; to his surprise, their chemical composition more closely resembled those of ancient Egyptian bronzes than native Chinese ores.”

“Sun argues that China’s Bronze Age technology, widely thought by scholars to have first entered the northwest of the country through the prehistoric Silk Road, actually came by sea. According to him, its bearers were the Hyksos, the Western Asian people who ruled parts of northern Egypt as foreigners between the 17th and 16th centuries B.C., until their eventual expulsion. He notes that the Hyksos possessed at an earlier date almost all the same remarkable technology — bronze metallurgy, chariots, literacy, domesticated plants and animals — that archaeologists discovered at the ancient city of Yin, the capital of China’s second dynasty, the Shang, between 1300 and 1046 B.C. Since the Hyksos are known to have developed ships for war and trade that enabled them to sail the Red and Mediterranean seas, Sun speculates that a small population escaped their collapsing dynasty using seafaring technology that eventually brought them and their Bronze Age culture to the coast of China.”

Sun’s theory is not original to Sun.  The idea that Chinese culture is rooted in Egypt dates back to atleast the 1890’s, when French philologist, Albert Terrien de Lacouperie, published in 1892 “the Western Origin of the Early Chinese Civilization from 2300 B.C. to 200 A.D. Translated into Chinese in 1903, it compared the hexagrams of the Book of Changes with the cuneiform of Mesopotamia and proposed that Chinese civilization originated in Babylon. The Yellow Emperor was identified with a King Nakhunte, who supposedly led his people out of the Middle East and into the Central Plain of the Yellow River Valley around 2300 B.C.”

Those interested in Chinese culture, or cultural evolution generally will find the article by Lewis an interesting and thought-provoking piece.  Those interested in nationalist political trends will also find the article of interest as it relates the political reaction and controversy the theory has generated, and the historical shaping of the current Chinese “dogma” regarding Chinese history and culture.

  Ricardo Lewis, Does Chinese Civilization Come From Ancient Egypt?, Foreign Policy, September 2, 2016